Minimum care spending rule helped save $3.9 billion in 2012: feds

By Russ Britt

If you’re complaining at all about how much your insurance premiums went up over the last year and a half or so, the Centers for Medicare and Medicaid Services said Thursday it could have been worse.

CMS officials contended a new rule under President Obama’s health-care overhaul initiative requiring that insurers spend at least eight cents of every dime on actual medical services helped save consumers as much as $3.9 billion.

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Roughly $3.4 billion of that came in upfront savings to consumers as insurers kept premiums down in order to meet the requirement. Another $500 million will come in the form of rebates — due to be mailed out by Aug. 1 — from insurers who failed to meet the requirement.

CMS says it arrived at its $3.4 billion figure via data submitted from insurers and calculating the savings based on number of claims filed. The agency said the savings from the so-called 80-20 rule more than doubled in 2012 from the 2011 savings of $1.6 billion. The rule was enacted in late 2010, several months after the legislation formally known as the Affordable Care Act went into effect.

CMS also said the 80-20 rule wasn’t accountable for all the $3.4 billion in savings, but said that other provision in the act helped keep costs down.

Inquiries to the insurance industry’s main lobbying group, America’s Health Insurance Plans, received no immediate response.

CMS released the findings Thursday in the wake of a GAO report that says the program is falling behind in setting up health-insurance exchanges. The report said CMS could have trouble meeting certain goals in plan management and customer assistance programs.

Gary Cohen, CMS deputy administrator, said the exchanges are proceeding as planned.

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